World Economy

Yields at Record Low as ECB’s QE Gathers Pace

Yields at Record Low as ECB’s QE Gathers PaceYields at Record Low as ECB’s QE Gathers Pace

Irish, Italian and Spanish yields fell to new record lows Tuesday morning as peripheral eurozone debt caught up with Monday’s rally in core bonds after the European Central Bank’s €1 trillion ($1.2t) asset purchases got underway.

Portuguese yields were also within sight of their troughs on the prospect of national central banks from the eurozone’s periphery will be more active in the market, Aljazeera reported.

This comes after the program’s debut was dominated by buying by the region’s core economies.

“Everybody is trying to anticipate the flows. The ECB and national central banks came into the market yesterday so people are just buying this morning to try and sell to the ECB at a higher price,” one eurozone bonds dealer said.

Irish 10-year bond yields were 3 basis points lower at 0.811%. Italian and Spanish 10-year yields fell 5 basis points to 1.238%and 1.179% respectively.

Portuguese yields were down 5 basis points at 1.72%, not far from an all-time low of 1.674% hit on Friday.

ECB and national central bank buying was seen as modest yesterday across two  to 30-year maturities but traders expected the pace to pick up in coming days if it is to meet the estimated monthly target of €45 billion of sovereign bonds.

Yields on top-rated bonds were also a whisker from their lows, with German 10-year yields – which set the benchmark for eurozone borrowing costs – 2 basis points lower at 0.288%.

Greece remained the exception, with its debt yields flat to slightly higher after a eurozone finance ministers’ meeting yesterday to discuss whether to provide Athens with further funding in exchange for delivering reforms ended without a breakthrough. But blunt comments from Greek Finance Minister Yanis Varoufakis, who described his country as the most bankrupt in the world, seemed to indicate an agreement could still be a long way off.

European leaders knew all along that Athens would never repay its debts, he said in comments that sparked a backlash in the German media Tuesday.

  Millions of Jobs?

This week Real Economy looks at the efforts the EU is making to help young people get into the workplace.

Youth unemployment is a huge problem. It is getting better but very slowly and there are still huge differences between EU member countries such as Spain and Germany.

Nearly half of all young people who emigrate in search of work have a university degree. More often than not they do not want to leave their home country but feel as if they have no choice.

The organization Eurofound says the EU needs to invest 50 million euros in policies to help young people find employment, but that the alternative, doing nothing, could end up costing three times as much and creating a lost generation.

Real Economy visits two countries, Portugal and Ireland, who both suffer from ‘brain drain’ – when young educated people emigrate in search of work and sometimes never return, other than to visit family.